Halozyme Reports Fourth Quarter And Full-Year 2017 Results

SAN DIEGO /PRNewswire/ -- Halozyme Therapeutics, Inc. (NASDAQ: HALO), a biotechnology company developing novel oncology and drug-delivery therapies, today reported financial results and recent highlights for the fourth quarter and full-year ended December 31, 2017.

"Building on a truly transformative year in 2017, we begin 2018 executing against a strong portfolio of new ENHANZE collaborations," said Dr. Helen Torley, president and chief executive officer. "With Janssen now studying Darzalex® SC in four Phase 3 trials, Roche recently initiating a Phase 1 study with ENHANZE and multiple targets projected to enter the clinic in the coming quarters, we have good line of sight to our goal of having six targets in clinical development by year-end, doubling the number of targets in the clinic from 2017.

"In our oncology pillar, we continue to project achieving the target number of progression-free survival events in HALO-301 late in the fourth quarter of 2018. In addition, we are making good progress in our exploration of the pan-tumor potential of PEGPH20 and look forward to sharing response-rate data from our combination studies with Halaven® and potentially with Keytruda® in the second half of the year. We begin 2018 in a strong position with multiple value-generating opportunities ahead for patients, the company and for shareholders."

Fourth Quarter 2017 and Recent Highlights include:

  • Janssen expanding its development program for the subcutaneous formulation of DARZALEX (daratumumab) with six planned and ongoing clinical studies. Halozyme's ENHANZE technology has the potential to enable a 15-ml injection to be delivered in five minutes or less. The ongoing or planned trials in patients with Amyloidosis, Smoldering Myeloma and Multiple Myeloma include four Phase 3 studies, one Phase 2 study and one Phase 1 study.
  • Roche initiating a Phase 1 study of an undisclosed target with Halozyme's ENHANZE drug-delivery technology.
  • Alexion announcing plans to initiate a Phase 1 trial in 2018 to study a next-generation subcutaneous formulation of ALXN1210 (ALXN1210 SC) with ENHANZE.
  • Baxalta and Roche achieving commercial milestones for products using ENHANZE triggering $5 million and $7 million in respective milestone payments.
  • Continued progress screening and enrolling patients in the HALO-301 study of PEGPH20 in combination with ABRAXANE® (nab-paclitaxel) and gemcitabine in first-line metastatic pancreas cancer patients with high levels of tumor hyaluronan (HA-High). An interim analysis will be conducted for the first primary endpoint of progression-free survival when the target number of events has been reached, which the company continues to project will be in late Q4.

Fourth Quarter 2017 Financial Highlights

  • Revenue for the fourth quarter was $189.6 million compared to $39 million for the fourth quarter of 2016. The year-over-year increase was driven by $101.4 million recognized upon the effective date of the BMS collaboration, a $15 million milestone payment from Janssen, a $40 million upfront payment from Alexion and growth in royalties from partner sales of Herceptin® (trastuzumab) SC, MabThera® (rituximab) SC and HYQVIA® (Immune Globulin Infusion 10% (Human) with Recombinant Human Hyaluronidase), offset by a decrease in research and development reimbursements. Revenue for the fourth quarter included $17.7 million in royalties, an increase of 24 percent from the prior-year period, $8.4 million in sales of bulk rHuPH20 primarily for use in manufacturing collaboration products and $4.2 million in HYLENEX® recombinant (hyaluronidase human injection) product sales.

    Revenue for the full year was $316.6 million, compared to $146.7 million in 2016.
  • Research and development expenses for the fourth quarter were $41.4 million, compared to $41.3 million for the fourth quarter of 2016.

    Research and development expenses for the full year were $150.6 million, compared to $150.8 million in 2016.
  • Selling, general and administrative expenses for the fourth quarter were $14.8 million, compared to $12.2 million for the fourth quarter of 2016. The increase was primarily due to personnel expenses, including stock compensation, for the period.

    Selling, general and administrative expenses for 2017 were $53.8 million, compared to $45.9 million in 2016.
  • Net income for the fourth quarter was $123.9 million, or $0.85 per share, compared to net loss in the fourth quarter of 2016 of $27.4 million, or $0.21 per share.

    Net income for the full year was $63 million, or $0.45 per share, compared to a net loss of $103 million in 2016, or $0.81 per share.
  • Cash, cash equivalents and marketable securities were $469.2 million at December 31, 2017, compared to $316.9 million at September 30, 2017.

Financial Outlook for 2018

Halozyme reiterated its financial guidance of:

  • Net revenue of $115 million to $125 million, including 25% to 30% royalty growth;
  • Operating expenses of $230 million to $240 million;
  • Operating cash burn of $75 million to $85 million; and
  • Year-end cash balance of $305 million to $315 million.

Webcast and Conference Call

Halozyme will webcast its Quarterly Update Conference Call for the fourth quarter of 2017 today, Tuesday, February 20 at 4:30 p.m. ET/1:30 p.m. PT. Dr. Torley will lead the call, which will be webcast live through the "Investors" section of Halozyme's corporate website and a recording made available following the close of the call. To access the webcast and additional documents related to the call, please visit halozyme.com approximately fifteen minutes prior to the call to register, download and install any necessary audio software. The call may also be accessed by dialing (877) 410-5657 (domestic callers) or (334) 323-7224 (international callers) using passcode 769890. A telephone replay will be available after the call by dialing (877) 919-4059 (domestic callers) or (334) 323-0140 (international callers) using replay ID number 95494046.

About Halozyme

Halozyme Therapeutics is a biotechnology company focused on developing and commercializing novel oncology therapies that target the tumor microenvironment. Halozyme's lead proprietary program, investigational drug pegvorhyaluronidase alfa (PEGPH20), applies a unique approach to targeting solid tumors, allowing increased access of co-administered cancer drug therapies to the tumor in animal models. PEGPH20 is currently in development for metastatic pancreatic cancer, non-small cell lung cancer, gastric cancer, metastatic breast cancer and has potential across additional cancers in combination with different types of cancer therapies. In addition to its proprietary product portfolio, Halozyme has established value-driving partnerships with leading pharmaceutical companies including Roche, Baxalta, Pfizer, Janssen, AbbVie, Lilly, Bristol-Myers Squibb and Alexion for its ENHANZE® drug delivery technology. Halozyme is headquartered in San Diego. For more information visit www.halozyme.com.

Safe Harbor Statement

In addition to historical information, the statements set forth above include forward-looking statements (including, without limitation, statements concerning the Company's future expectations and plans for growth in 2018, entering into new collaboration agreements, the development and commercialization of product candidates, including timing of clinical trial results announcements and future development and commercial activities of our collaboration partners, the potential benefits and attributes of such product candidates and expected financial outlook for 2018) that involve risk and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. The forward-looking statements are typically, but not always, identified through use of the words "believe," "enable," "may," "will," "could," "intends," "estimate," "anticipate," "plan," "predict," "probable," "potential," "possible," "should," "continue," and other words of similar meaning. Actual results could differ materially from the expectations contained in forward-looking statements as a result of several factors, including unexpected expenditures and costs, unexpected fluctuations or changes in revenues, including revenues from collaborators, unexpected delays in entering into new collaboration agreements, unexpected results or delays in development of product candidates, including delays in clinical trial patient enrollment and development activities of our collaboration partners, and regulatory review, regulatory approval requirements, unexpected adverse events and competitive conditions. These and other factors that may result in differences are discussed in greater detail in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 20, 2018.

                                                                     Halozyme Therapeutics, Inc.

                                                           Condensed Consolidated Statements of Operations


                                                              (In thousands, except per share amounts)

                                                Three Months Ended                                        Twelve Months Ended

                                                 December 31,                                           December 31,

                                           2017                            2016                      2017                     2016
                                           ----                            ----                      ----                     ----


    Product sales, net                            $12,593                                          $13,422                            $50,396      $53,392

    Royalties                            17,668                            14,289                                63,507                 50,984

    Revenues under collaborative
     agreements                         159,303                            11,292                               202,710                 42,315
                                        -------                            ------                               -------                 ------

    Total revenues                      189,564                            39,003                               316,613                146,691
                                        -------                            ------                               -------                -------

    Operating expenses:

    Cost of product sales                 7,488                             8,002                                31,152                 33,206

    Research and development             41,376                            41,349                               150,643                150,842

    Selling, general and administrative  14,771                            12,227                                53,816                 45,853
                                         ------                            ------                                ------                 ------

    Total operating expenses             63,635                            61,578                               235,611                229,901
                                         ------                            ------                               -------                -------

    Operating income (loss)             125,929                          (22,575)                                81,002               (83,210)

    Other income (expense):

    Investment and other income, net      1,080                               366                                 2,592                  1,326

    Interest expense                    (5,458)                          (5,599)                             (21,984)              (19,977)
                                         ------                            ------                               -------

    Income (loss) before income taxes   121,551                          (27,808)                                61,610              (101,861)

    Income tax (benefit) expense        (2,331)                            (422)                              (1,361)                 1,162
                                         ------                              ----                                ------                  -----

    Net income (loss)                            $123,882                                        $(27,386)                           $62,971   $(103,023)
                                                 ========                                         ========                            =======    =========

    Net income (loss) per share:

    Basic                                           $0.87                                          $(0.21)                             $0.46      $(0.81)
                                                    =====                                           ======                              =====       ======

    Diluted                                         $0.85                                          $(0.21)                             $0.45      $(0.81)
                                                    =====                                           ======                              =====       ======

    Shares used in computing net income
     (loss) per share:

    Basic                               141,718                           128,185                               136,419                127,964
                                        =======                           =======                               =======                =======

    Diluted                             145,633                           128,185                               139,068                127,964
                                        =======                           =======                               =======                =======


                                                    Halozyme Therapeutics, Inc.

                                               Condensed Consolidated Balance Sheets


                                                          (In thousands)

                                                              December 31,             December 31,
                                                                      2017                         2016
                                                                      ----                         ----


    Current assets:

    Cash and cash equivalents                                                 $168,740                              $66,764

    Marketable securities, available-for-
     sale                                                          300,474                        138,217

    Accounts receivable, net                                        22,133                         15,680

    Inventories                                                      5,146                         14,623

    Prepaid expenses and other assets                               13,879                         21,248

    Total current assets                                           510,372                        256,532

    Property and equipment, net                                      3,520                          4,264

    Prepaid expenses and other assets                                5,553                            219

    Restricted cash                                                    500                            500
                                                                       ---                            ---

    Total assets                                                  $519,945                                $261,515
                                                                  ========                                ========


    Current liabilities:

    Accounts payable                                                            $7,948                               $3,578

    Accrued expenses                                                39,601                         28,821

    Deferred revenue, current portion                                6,568                          4,793

    Current portion of long-term debt, net                          77,211                         17,393
                                                                    ------                         ------

    Total current liabilities                                      131,328                         54,585

    Deferred revenue, net of current
     portion                                                        54,297                         39,825

    Long-term debt, net                                            125,140                        199,228

    Other long-term liabilities                                        814                            358

    Stockholders' equity (deficit):

    Common stock                                                       143                            130

    Additional paid-in capital                                     731,044                        552,737

    Accumulated other comprehensive loss                             (450)                           (6)

    Accumulated deficit                                          (522,371)                     (585,342)

    Total stockholders' equity (deficit)                           208,366                       (32,481)
                                                                   -------                        -------

    Total liabilities and stockholders'
     equity (deficit)                                                         $519,945                             $261,515
                                                                              ========                             ========


Jim Mazzola

Chris Burton



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SOURCE Halozyme Therapeutics, Inc.

Company Codes: NASDAQ-NMS:HALO

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